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Why Denny’s (DENN) Stock Is Retreating Today

Denny’s (DENN) is sinking 8% after investment bank Benchmark slashed its price target on DENN stock. The chain also reported weaker-than-expected fourth-quarter results on Wednesday and announced plans to close more of its restaurants than it had previously anticipated.

Benchmark’s Take on Denny’s

As reasons for the price target cut, the investment bank cited what it sees as an adverse beginning of 2025 for the company and its lackluster 2025 guidance. But Benchmark did keep a Buy rating on the shares, suggesting that it continues to view them as a worthwhile turnaround play.

A close-up of a table of people enjoying their meal and conversing in a Denny’s restaurant.

Denny’s Q4 Results and Guidance

The company reported Q4 earnings per share of 14 cents, versus analysts’ average estimate of 15 cents. Its Q4 revenue fell 0.6% versus the same period a year earlier to $114.7 million which was $1.34 million below the mean outlook. On a positive note, its adjusted EBITDA climbed 11% year-over-year to $22.2 million.

But the company, citing “recent shifts in consumer sentiment due to macro events,” provided 2025 domestic system-wide same-restaurant sales guidance of between -2.0% and a gain of 1%.

Additionally, after Denny’s announced in 2024 that it would close 150 restaurants, it now plans to shut down as many as 178 locations between last year and this year. Specifically, it closed 88 restaurants in 2024 and intends to close an additional 70-90 of them in 2025.

While we acknowledge the potential of DENN, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than DENN but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

READ ALSO 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock

Disclosure: None. This article is originally published at Insider Monkey.

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